Annual Report 

2012 annual report; ready for life 

Thanks to the planning they’ve done with their financial representatives, our clients are better prepared financially for what life may bring.

See how we’re helping people build more secure futures in our Annual Report stories below. For a more interactive online experience, check out the tablet version of our report.

CEO Message 

Client Stories 

Financial Results 

Policyowners' Report 

Giving Back 

 

Ready for Great Things

john e schlifskeWhen I reflect on our performance in 2012, and when I consider our future, one notion comes to mind: We’re ready. Throughout this report, you’ll see examples of our readiness to face challenges and embrace opportunities.

Ready for Consistent Results

No doubt, 2012 was another tough year for many companies and Americans. Yet despite a sluggish economy and a prolonged period of record-low interest rates, your company continued to stand strong. We again earned the highest financial strength ratings awarded to any life insurer by all four of the major credit rating agencies.

We also announced our largest dividend payout ever. In 2013, we expect to pay more than $5 billion in policyowner dividends, including a life insurance dividend about three times our nearest competitor.1

Ready for More Secure Futures

At a time when all of us need financial strength and stability, your company helped millions of people build more secure futures – people like Rick and Danielle Arnstein, who moved closer to their goals, even during a job layoff. We believe that’s why more people are choosing Northwestern Mutual. In 2012, policyowners bought a record amount of new insurance and annuities as measured by premium revenue.We were pleased to see that our performance and stability continued to attract even more new customers in 2011. Our financial representatives sold 350,000 new policies during the year and placed on the books a record amount of new premium in traditional portfolio-based permanent life insurance.

Ready for Healthier Children

I also want to tell you about a new battle we’ve joined. In 2012, we launched a philanthropic program to help fight childhood cancer. The aims of this program are twofold: We will support families affected by this terrible disease, and we hope to accelerate a cure for childhood cancer itself. We believe that by investing in the communities in which we work, we can make a difference in people’s lives.

As always, thank you for choosing Northwestern Mutual as a partner on your journey. We pledge to help you stay ready.

 


John E. Schlifske
Chairman and Chief Executive Officer

1Northwestern Mutual analysis of ordinary life insurance dividend based on historical SNL data.

Client Stories

Northwestern Mutual helps clients prepare for the unexpected and reach their financial goals.

Watch brief video interviews in which clients talk about how Northwestern Mutual and their financial representatives helped them through pivotal moments in their lives.

Learn more about how these clients are planning for their financial futures in the 2012 Annual Report.

 

arnstein family - ready for new beginnings







Watch video — Ready for New Beginnings
Clients Rick and Danielle Arnstein
Financial Representative Anna Cenicola

Through careful planning with their longtime financial representative, this evolving family continues to move forward, even when faced with an unforeseen ‘career change.’
iyer family - ready for every stage







Watch video — Ready for Every Stage
Clients Uma and Gauri Iyer
Financial Representative Sunil Oberoi

A vision for today and tomorrow provides a sense of stability for this young family. With the right mix of insurance and investment products, they’re on track to reach their financial goals.
dr amye - ready for big dreams







Watch video — Ready for Big Dreams
Dr. Amye and John Michael Hall
Wealth Management Advisor Todd Tauzin

Northwestern Mutual products help a dentist pursue dreams of growing her practice and protecting her family. Not even a disability during pregnancy could hinder her plans.
phil clemente - ready for what matters






Watch video — Ready for What Matters
Client Phil Clemente
Financial Representative Robert Gillespie

A wife and mother’s desire to prepare for the unexpected helps family members live without her. Thanks to her insistence on life insurance, they’re able to heal and focus on the things that matter most.

Mutuality and Policyowner Value

Northwestern Mutual’s principal financial goal remains the same in any economic environment: to pay a level of dividends that delivers the highest product value to policyowners without compromising the company’s superior financial strength and stability.

Northwestern Mutual is managed for the long-term benefit of our policyowners. This mutual philosophy leads us to pay participating policyowners the highest possible dividends deemed consistent with preserving the long-term strength and security of the company. Dividends reflect our underlying claims experience, investment performance and expense structure. In total, dividends to policyowners are estimated to exceed $5 billion in 2013 and are expected to be the highest amount of dividends paid in company history.

This includes approximately: $4.6 billion in dividends on permanent life insurance policies; $140 million in dividends on term life insurance policies; $278 million in dividends on individual disability insurance policies; and $30 million in dividends on fixed and variable annuity contracts. Additionally, our subsidiary, Northwestern Long Term Care Insurance Company, approved $7 million in dividends to long-term care policyowners in 2013.

See our complete 2012 Financial Results.

 

2012 Policyowners' Examining Committee Report

Since 1907, a group of three to five policyowners has been given unrestricted access to the company to independently evaluate its operations, management and strategic plans. Each year, the committee’s findings are published in the Annual Report. The 2012 committee’s complete report is printed here.

policyowners' examining committee2012 Examining Committee Members

Pictured left to right: Alyssa Altman, vice president and business unit lead, SapientNitro, a division of Sapient Corp., Chicago, Illinois; Bryan Timm, chief operating officer and executive vice president, Columbia Sportswear Company, Portland, Oregon; William Harvey, president, DuPont Packaging & Industrial Polymers, Wilmington, Delaware; Bradley Winquist, president, owner and director, Circuit Services Group, Inc., Pewaukee, Wisconsin; and Pamela Liebman, (Chair) president and CEO, The Corcoran Group, New York, New York.

We’re honored to serve as this year’s Policyowners’ Examining Committee. As members of the committee, we had a chance to spend several days at Northwestern Mutual’s home office talking to leaders, learning more about the company’s strategy and hearing perspectives from the field force.

We would like to begin our 2012 report by recognizing the importance of Northwestern Mutual’s financial strength. The company has shown resilience through the economic downturn by maintaining its strong surplus, industry-leading dividend payout and the highest financial strength ratings awarded to any life insurer. In times of economic uncertainty, people are looking for the stability and security that Northwestern Mutual provides. This is reflected in the company’s strong product sales from both new and existing clients. To continue to grow and thrive in the future, the company must further evolve to meet changing demographics, consumer preferences and economic challenges. This will involve moving forward on the company’s agenda to address internal and external issues and considering action that is even more bold and visionary.

We believe that by building on the past, adapting to the present and thoughtfully looking forward, Northwestern Mutual’s leaders will ensure a secure future for policyowners, the field force and employees for decades to come.

Our External Observations

Northwestern Mutual is engaging with prospects, policyowners and its field in bold new ways. The company’s brand-building efforts are raising visibility of the company and the value of working with a Northwestern Mutual financial representative – or even becoming one. In particular, the company’s partnership with the NCAA® is building national brand awareness while also strengthening local ties through sponsorships in the communities the company serves.

The trusted, personal connection between clients and financial representatives has always been crucial to Northwestern Mutual’s success, and social media provides a new way to foster those connections. We applaud the company’s efforts in branding and social media because it’s another way to build relationships and share Northwestern Mutual’s unique approach to financial planning.

With economic uncertainty affecting consumer confidence, the company’s insurance and investment products, knit together by a holistic planning approach, give people confidence to achieve their financial security goals. We were pleased to see all three elements of the company’s go-to-market strategy in action, including increased marketing and brand awareness, a close connection between representatives and clients, and the integration of products and planning to help clients meet their needs.

We encourage the company to enhance its awareness and ability to react to market opportunities. The demographic face of Northwestern Mutual’s market is changing. In order to bring financial security to more people, the company must meaningfully diversify the ethnic and gender makeup of its field force. We recommend continuing the company’s successful field internship program while also exploring new ways to recruit financial representatives in the future.

Opportunities for growth also abound within the company’s current client base. The planning process must be brought to all existing clients so they can fully achieve financial security. Furthermore, planning can better span generations of clients by bringing heirs and beneficiaries into the policyowner family. We believe a stronger focus on reaching generations of clients is imperative to the company’s growth strategy.

Our Internal Observations

While devoted to the longstanding principles of mutuality, doing what’s right and putting policyowners first, Northwestern Mutual’s culture continues to evolve. Change, embodied in the mantra of “the best must get better,” has characterized Chairman and CEO John Schlifske’s leadership. John has championed advances in talent management, employee engagement, diversity and inclusion, efficiency and data-driven decision making.

In pursuit of this agenda, John is cultivating a dynamic group of new leaders and encouraging open debate and dialogue about key business issues. These new leaders are pursuing innovation while remaining committed to integrity and the strong risk management culture that has served Northwestern Mutual so well. We applaud John and his leadership team for their courage in evolving the culture to ensure the company’s continued success.

We encourage leaders to help and inspire others to bring their best. A culture of accountability is crucial to ongoing improvement. As leaders develop and empower employees, productivity and the overall employee experience will improve. Varied viewpoints also are critical to evolving the culture. We recognize progress in bringing more diversity to both the home office and field and encourage more growth in this area.

Call to Action for Representatives, Policyowners

Our time on the Policyowners’ Examining Committee has impressed upon us the interdependence between past, current and future policyowners. We all have a stake in the financial strength, vitality and future of our great company. We should not keep Northwestern Mutual’s unique planning approach, relationship-based sales and quality products to ourselves.

We issue a call to action for both financial representatives and policyowners: Create multi-generation plans and relationships.

  • Policyowners: Introduce your financial representative and his or her team to your family.
  • Financial representatives: Ask to meet with the family members of your clients, and prepare a plan that meets the unique needs of those families.

For more than 155 years, Northwestern Mutual has helped families navigate through their times of most dire need and weather the turbulence of inflation, deflation and economic turmoil. We owe the opportunity to be policyowners to our children, grandchildren and relatives.

Report submitted November 15, 2012

 

Ready for Giving Back

Every day in the United States, 36 children are diagnosed with some form of cancer.1 Northwestern Mutual is working to reverse that trend with its new philanthropic program to fight childhood cancer. The program builds on our legacy of helping children and families.

patterson familySponsored by the Northwestern Mutual Foundation, the company’s childhood cancer program will help accelerate the search for a cure to childhood cancer and provide support to kids and families facing the daily struggles of the disease.

“Cancer is the leading cause of death by disease in children under the age of 15 in the United States;2 yet childhood cancer research and services for families facing this disease are vastly underfunded,” says John Schlifske, chairman and CEO of Northwestern Mutual.

Through partnerships with Alex’s Lemonade Stand Foundation and Starlight Children’s Foundation™, Northwestern Mutual is activating a range of programs and events in communities across the country to fight childhood cancer.


Learn more about our philanthropic program to fight childhood cancer.

The company’s childhood cancer program harnesses the passion of thousands of Northwestern Mutual employees, financial representatives and family members. Field Director and Wealth Management Advisor Wesley Patterson and his family are just one example. The family recently ran a lemonade stand event that raised more than $5,400 for the cause. Right: Wesley; his wife, Jennifer; and their children, (left to right) Carly, Cole and Cason; operate their lemonade stand in Gadsden, Alabama.

1CureSearch for Children’s Cancer
2National Cancer Institute

 

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